30th September 2010
Good morning. The pound fell again yesterday against the Euro, after Tuesdays comments from the BoE that more QE may be required. Weak UK services output and lending data on Wednesday renewed concerns about a fragile economy and kept negative sterling sentiment intact. Rates at 08:30am are as follows:
Pound suffers again
- GBP/EUR 1.1639
- GBP/USD 1.5829
- GBP/AUD 1.6346
- GBP/NZD 2.1447
- GBP/CAD 1.6337
- GBP/CHF 1.5472
- GBP/ZAR 11.000
- GBP/JPY 131.90
- GBP/NOK 9.2666
- GBP/HUF 322.12
- EUR/USD 1.3603
On Tuesday after one of the BoE members pushed the case for further Quantitative Easing the pound fell sharply against other currencies. Further weak data yesterday has undermined Sterling, and rates have fallen significantly in the last few weeks.
Against the dollar, the pound steadied, coming off a seven-week high hit on Tuesday, though the U.S. currency stayed under pressure as concerns over renewed policy easing by the Federal Reserve continued to take a toll on the U.S. unit.
Bank of England & Quantitative Easing
"There is general bad sentiment around the pound at the moment and there could be a fair bit of sterling selling going into the Bank of England meeting next week," said Lee McDarby, corporate risk manager at Investec.
Although a move towards QE next week is highly unlikely, analysts said the vote, which will be revealed in the minutes published two weeks later, could see a three way split with regards to who votes for in interest rate hike.
9 members vote, and 1 member usually always votes for a hike. If the split is 3 way, then it signals uncertainty over which direction to take in order to support the economic recovery. This will further hurt the pound, and so we expect further volatility in the coming weeks.
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Labels: Bank of England, Quantitative Easing